Eliza Wong
Major Banks in Shenzhen Respond to New Property Policy
On the morning of September 12, multiple banks in Shenzhen, including Industrial and Commercial Bank of China (ICBC) Shenzhen Branch, China Construction Bank (CCB) Shenzhen Branch, Shanghai Pudong Development Bank (SPDB) Shenzhen Branch, and Bank of Shanghai Shenzhen Branch, issued announcements regarding the optimization of commercial personal housing loan interest rate pricing mechanisms. These announcements came in response to the new property market policies introduced by Shenzhen on September 5.
According to the notices, these banks will no longer distinguish between first-home and second-home mortgages. The specific interest rate for each customer’s commercial personal housing loan will be determined based on the requirements of the Shenzhen Market Interest Rate Pricing Self-Discipline Mechanism, combined with the bank’s operational conditions and the customer’s risk profile.
Key banks that have issued announcements include:
- Industrial and Commercial Bank of China (ICBC) Shenzhen Branch
- China Construction Bank (CCB) Shenzhen Branch
- Shanghai Pudong Development Bank (SPDB) Shenzhen Branch
- Bank of Shanghai Shenzhen Branch
An insider from a listed bank pointed out that, compared to government departments, banks’ response speed may be relatively delayed due to the complexity of their credit systems. When faced with sudden policy changes like interest rate adjustments, backend technical staff require time to modify and improve the systems.
ICBC and CCB Lead the Way
ICBC Shenzhen Branch stated that, in accordance with the spirit of the Shenzhen “Notice on Further Optimizing and Adjusting the City’s Real Estate Policy Measures” (Shen Jian Zi [2025] No. 199), the bank will no longer distinguish between first-home and second-home mortgages. The branch also published the addresses and contact information of approximately 25 sub-branches and business departments in the Shenzhen area.
CCB Shenzhen Branch similarly announced that, based on the latest policy, it will no longer differentiate between first-home and second-home mortgages. The bank emphasized that no fees will be charged for this adjustment of existing mortgage rates and warned customers to be cautious of fraud attempts.
Unexpected Benefits for Existing Mortgage Customers
The new property market policies in Shenzhen are set to benefit a larger number of existing mortgage holders, particularly those with second-home loans.
ICBC Shenzhen Branch noted in its announcement that, according to the “Announcement on Improving the Pricing Adjustment Mechanism for Existing Personal Housing Loan Interest Rates” issued on October 31, 2024, some second commercial personal housing loans have triggered the routine adjustment mechanism for existing mortgage rates. This is because if the spread of the existing mortgage rate is higher than the average spread of newly issued mortgage rates nationwide in the previous quarter plus 30 basis points (BP), customers can apply to adjust the spread. The renegotiated spread will not be lower than the average spread of newly issued mortgage rates nationwide in the previous quarter plus 30 BP.
Starting from September 12, eligible customers can apply for spread adjustments through mobile banking or offline at their loan bank.
Application Channels and Processes
CCB Shenzhen Branch and Bank of Shanghai Shenzhen Branch also explicitly mentioned this “benefit” in their announcements. However, the channels for applying to adjust mortgage rates vary among banks.
For example, CCB Shenzhen Branch stated that eligible borrowers can log into CCB’s mobile banking or the CCB Smart Personal Loan WeChat mini-program starting September 12. Through the “Existing Mortgage Rate Adjustment” function, they can click on “Spread Adjustment Query” to check if they meet the conditions for spread negotiation. Eligible customers can submit their applications as prompted by the system. The new spread takes effect on the day the application is successfully processed, and customers can check the results the next day.
Background: The National Dynamic Adjustment Mechanism
In late October 2024, the People’s Bank of China (PBOC) and other relevant departments introduced a routine adjustment mechanism for existing mortgage rates. According to the PBOC Announcement [2024] No. 11, when the deviation between existing mortgage rates and newly issued mortgage rates nationwide reaches a certain level, borrowers can independently negotiate with banks to dynamically adjust their existing mortgage rates.
A relevant person from a national commercial bank revealed that major commercial banks have generally set the deviation between newly issued mortgage rates and existing mortgage rates at 30 BP. “This has basically become an industry consensus.” Once triggered, mortgage customers can apply to their banks to reduce the spread on their existing mortgages.
Shenzhen’s Unique Position
Prior to the new policy, the mortgage interest rate for second homes in Shenzhen was 3.45%. After the new policy, the rates for both first and second homes will be unified at 3.05%. This means that, according to the current understanding of the banking industry, the interest rate difference between newly issued mortgages and existing mortgages has reached 40 BP after the new policy.
Based on public information, Shenzhen appears to be the first city in China to trigger this mechanism since the establishment of the routine adjustment mechanism for existing mortgage rates last year, leading to a further reduction in interest rates for second-home mortgage customers.
Implications for the Future of Mortgage Rates
The listed bank insider mentioned that, considering various factors, there may still be room for further reductions in mortgage rates in the future.
This policy adjustment not only provides immediate relief to existing mortgage holders but also signals a broader trend toward more flexible and responsive mortgage rate mechanisms in China’s real estate market.
Potential for Further Adjustments
As the real estate market continues to evolve, further adjustments to mortgage rate policies may be on the horizon. Banks and regulators are likely to continue monitoring market conditions and making changes as needed to support both borrowers and the overall health of the property market.
Key Takeaways and Next Steps for Borrowers
For existing mortgage holders in Shenzhen, especially those with second-home loans, this policy change presents an opportunity to reduce their interest burdens. Borrowers should proactively check their eligibility and apply through the designated channels provided by their banks.
It is important to note that banks have emphasized that no fees will be charged for these adjustments, and customers should be wary of any third parties claiming to assist with the process for a fee.
As the first city to trigger this mechanism, Shenzhen’s experience may serve as a model for other cities in China, potentially leading to wider implementation of dynamic mortgage rate adjustments across the country.
Borrowers are encouraged to stay informed about further developments and to take advantage of any opportunities to optimize their mortgage terms in line with evolving policies.
